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HCA 2480/2017
[2022] HKCFI 565
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 2480 OF 2017
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| BETWEEN |
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CHOW SHU SOON (曹壽萱) |
Plaintiff |
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and
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NG FUK MING (吳復明) |
Defendant |
| AND BETWEEN |
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CHEUNG CHUI WAN (張翠雲), Executrix ofEstate of |
Plaintiff |
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CHOW SHU SOON, deceased |
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and
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NG FUK MING (吳復明) |
Defendant |
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(By Original Writ and Order to carry on dated 28th May 2020) |
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__________________
| Before: |
Deputy High Court Judge P Fung SC in Court |
| Dates of Trial: |
31 May and 1 to 3 and 22 June 2021 |
| Date of Judgment: |
4 March 2022 |
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J U D G M E N T
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1.This is an action which was started by the original Plaintiff, Chow Shu Soon (“the Deceased”) against the Defendant in 2017 when he was aged about 92 years.
2.The Deceased died on 20 December 2019. By the Order of Master Lai dated 28 May 2020, Cheung Chui Wan (“the Executrix”), who had been granted Letters of Administration to the estate of the Deceased, was made a party to the action for the purpose of carrying on the action as the Plaintiff.
THE FAMILY RELATIONS OF THE DECEASED AND MADAM CHAN OY KWAN (“MADAM CHAN”)
3.The Deceased was married to a Madam Mui Fung Kiu in 1946. They had two sons, namely, Chow Man Yuen, born in 1947, and Chow Yat Kwan, born in 1955.
4.Chow Man Yuen married his wife by the name of Chow Mui Pui Chi and Chow Yat Kwan married his wife by the name of Chow Mui Mo Ching, Wendy (“Wendy”). They emigrated to the United States and have been living there.
5.The Deceased had been working as a clerk in China Light & Power Co Ltd (“China Light”).
6.In about 1967, the Deceased met Madam Chan who was working as a manageress of ballroom girls in a ballroom. She was also generally known and addressed as “華姐”.
7.At that time, Madam Chan herself was married to her second husband, one Tse Kwok Leung. They had a son by the name of Tse Kai Kwong.
8.Madam Chan was previously married to another person surnamed Ng who died. They had one daughter by the name of Ng Fuk Ming, ie, the Defendant (“the Defendant”). The Defendant’s husband is called Lam Siu Fung. They have a daughter by the name of Lam Yat Hung.
THE RELEVANT EARLY HISTORY
9.The Deceased and Madam Chan fell in love with each other. They decided to leave their own respective families and started cohabiting together. They never married each other.
10.In 1967, the Deceased won a sum of about $270,000 in a lottery. That was of course quite a substantial sum in those days.
11.In 1969, the Deceased and Madam Chan decided to buy a flat in a new development known as Flat 7 on 16th Floor, Honour House, No. 379 Nathan Road, Kowloon, Hong Kong (“the Property”). The purchase price of $40,329 was paid partly from out of the said lottery money and partly by finance secured by a bank mortgage. The Property was assigned to and registered in the name of the Deceased. The Deceased and Madam Chan had moved into it and resided therein until their respective deaths.
12.There does not appear to be any dispute between the parties regarding the early history set out above.
13.The Property is one of the assets claimed by the Deceased in these proceedings.
THE GIST OF THE DECEASED’S CLAIM
14.Basically, the claim of the Deceased relates to and is for two assets, namely : -
(i) the Property and
(ii) an account of all sums received by the Defendant arising out of a sum of $4 million (“the Alleged Trust Money”) and payment to the Deceased of all sums found to be due to him.
15.In the Amended Statement of Claim, the Deceased alleged that the Property was assigned by him to the Defendant in about July 2009 to be held on trust for him. He therefore claimed for the transfer of the Property back to himself.
16.He also claimed that in about July 2010, Madam Chan gave, inter alia, a sum of $4 million (the Alleged Trust Money) to the Defendant to be held on trust for the purpose of maintaining himself and Madam Chan. The Defendant did maintain them by paying the sum of $15,000 each month from out of the Alleged Trust Money for their living expenses until about November 2015. He therefore claimed an account of the Alleged Trust Money and payment to him of all sums found to be due to him.
THE WITNESS STATEMENTS AND THE WITNESSES
17.The Deceased made 2 witness statements. He of course did not give evidence because he had died by the time of the trial.
18.The Executrix also made 2 witness statements and she gave oral evidence on behalf of the Plaintiff.
19.Wendy also made one witness statement and gave oral evidence for the Plaintiff.
20.One Lai Wai Fung also made a witness statement and gave oral evidence on behalf of the Plaintiff.
21.The Defendant made 2 witness statements and gave oral evidence.
22.One Lee Bik Ling, the wife of Tse Kai Kwong and sister-in-law of the Defendant, made a witness statement and gave oral evidence for the Defence.
THE EVIDENCE
I. The Deceased
23.The evidence of the Deceased as gathered from his 2 witness statements can be summarized as follows : -
(1) He was aged 92 years and in good health. He was educated up to Form 5 and could read and write Chinese.
(2) He set out his family circumstances and referred to his relationship with Madam Chan and their purchase of the Property as set out hereinabove and then continued as set out below.
(3) With the aim of getting Madam Chan back to a normal occupation, he used part of the lottery money to finance the renting of premises at No. 12 Observatory Road, 1st Floor (“the Observatory Road Property”) and the operation of a guest house by the name of “美心賓館” (“the Guest House”) there by Madam Chan.
(4). He and Madam Chan managed the Guest House everyday and they would use the profits therefrom to defray their daily expenses.
(5) In early 1981, he used $650,000 to purchase the Observatory Road Property and arranged for it to be put under the name of Madam Chan. The purchase price was provided from out of the profits of the Guest House as well as a mortgage loan.
(6) From the outset, he had let Madam Chan take care of all the financial matters. The profits from the Guest House also formed the source of maintenance for Madam Chan’s children.
(7) In the 1990’s, they decided to let out the Guest House for someone else to operate. From then until about 2010, they derived a steady rental income from there.
(8) Getting back in time to 1968, he gave $30,000 to Madam Chan for her to buy a property known as Flat 22, 5th Floor of Man Yuen Building on Man Yuen Street, Jordan, Kowloon (“the Man Yuen Property”).
(9) In 1974, he provided $140,000 for Madam Chan to purchase another property known as Unit C on 5th Floor of Lok Fun Mansion, 7 – 8 Knutsford Terrace, Kowloon (“the Knutsford Terrace Property”). Since then, Tse Kwok Leung and Tse Kai Kwong had been allowed to live there rent free. Madam Chan never resided there.
(10) At first, the relationship between Madam Chan and the Defendant was not good. After he had acted as a mediator, their relationship improved.
(11) The Defendant never worked and had no income. Her husband was a teacher. The Deceased’s own mother-in-law and brother-in-law had been living at a property on the 1st Floor of No. 74A Waterloo Road, Kowloon (“the Waterloo Road Property”). They were emigrating to another country. Madam Chan asked him to buy the property for the purpose of providing a residence for the Defendant and her family. Thus, in 1992, he paid US$145,000 for the Waterloo Road Property and put it in the name of the Defendant. The source of the money for part of the purchase price and for servicing the mortgage loan was the income from the Guest House. The Defendant and her family resided there until about 2010. They never paid any rent.
(12) In about July 2009, he was suffering from cataract and prostate problems. At the suggestion of Madam Chan, he decided to transfer the Property to the Defendant to be held on trust until his two sons returned to Hong Kong.
(13) Madam Chan at that time was also suffering from bad health. The Defendant as well as he himself urged Madam Chan to make a will.
(14) He denied that he had ever indicated to Madam Chan that he wanted to have more cash to spend as alleged by the Defendant. He further denied that throughout the years Madam Chan had supported him financially.
(15) On a certain day in July 2009 (the exact date he could not remember), he, Madam Chan and the Defendant went to the office of Messrs. S H Chan & Co (“SHC & Co”), a firm of solicitors, for the purpose of transferring the Property to the Defendant. He was asked by a Chinese female employee of that firm to put his signature on a document in English. He was under the impression that the effect of that document was to transfer the Property to under the name of the Defendant temporarily for her to hold on trust for him. Although he had worked in China Light, his knowledge of the English language was limited. He was aged 84 years at that time. On the same day, Madam Chan also dealt with the making of her own will.
(16) Both at and before they went to SHC & Co, no one had told him that the effect of the said document in English was that he was selling the Property to the Defendant for $600,000. By that time, the entire mortgage loan had been repaid and he had no reason to sell the Property to anyone.
(I shall deal with all the documents allegedly signed by the Deceased at SHC & Co hereinafter.)
(17) Neither the Defendant nor anyone else had ever paid him the sum of $600,000 or any money as the price for his selling the Property.
(18) According to his knowledge, the then market price of the Property far exceeded the sum of $600,000. In fact, the Executrix purchased her own flat, Flat 5 on the 16th Floor of the same building, just 2 doors away from the Property, around the same time in September 2009 for the price of $2.15 million.
(19) On the said occasion that he went to SHC & Co, no one had told him that he should obtain independent advice.
(20) After that occasion, he continued to live at the Property and paid the rates on the Property. After his relationship with the Defendant had deteriorated in October 2015, the Defendant then began to pay the rates on the Property from 2016 onwards.
(21) In July 2010, the Observatory Road Property was sold for the price of $12 million.
(22) At the request of Madam Chan, the Deceased agreed that the said sum of $12 million should be divided into 3 portions. $4 million was given to Tse Kai Kwong. $4 million was given to the Defendant. The remaining $4 million (the Alleged Trust Money) was also given to the Defendant to be held by her on trust and to be applied for the maintenance of the Deceased and Madam Chan.
(23) From that time on, the Defendant had been paying out $15,000 each month for the maintenance of the Deceased and Madam Chan. After the death of Madam Chan in October 2015 and from about November 2015 onwards, the Defendant ceased to provide any maintenance for the Deceased.
(24) Even prior to the death of Madam Chan, the Deceased had on many occasions requested the Defendant to transfer the Property back to him. The Defendant responded by threatening him that, if he so insisted, she would take Madam Chan who was then suffering from illness away with her. Madam Chan had had two strokes and was also suffering from cancer. In view of such threat and his love for Madam Chan, he did not insist.
(25) After the death of Madam Chan, the Defendant accused the Deceased of having an affair with his Indonesian domestic helper. Their relationship further deteriorated.
(26) The Deceased turned to his neighbour, the Executrix, for help.
(27) Since October 2010, the Defendant also started exchanging WeChat messages with Wendy. In the course of the same, the Defendant made statements and admissions against her own interest.
(I shall refer to these below.)
(28) There were also occasions when the Plaintiff, the Defendant and other persons were together at the end of November 2015 and on 4 December 2015 as described below. On such occasions, the Defendant again made statements and admissions against her own interest. The conversations at such meetings were recorded by the Executrix and the transcripts as agreed by the two sides have been produced in court.
(I shall deal with the relevant WeChat messages and the relevant parts of the agreed transcripts hereinafter.)
(29) At about the end of November 2015, the Defendant, her daughter and another 5 persons went up to the Property and took away documents, electric appliances, and food stuff etc and also created trouble. The security staff informed the Executrix and she reported the matter to the police. The police arrived and the Defendant and/or her companions paid some compensation in cash to the Deceased.
(30) Furthermore, sometime in November 2015, the Defendant telephoned Wendy and said that if she was going to “轉回” (re-transfer) the Property to the Deceased, he would not be able to sell or mortgage it within 5 years. The Defendant also said that, because the Deceased had no money for his maintenance, the Property should be sold first and the proceeds of sale would then be given back to him for his maintenance. That amounted to an admission by the Defendant that the Property belonged to him.
(31) On 4 December 2015, when the Defendant and other persons went up to the Property, she made various statements and admissions against her own interest. As stated above, I shall deal with those below.
(32) On 5 December 2015, the Defendant signed a provisional agreement for sale and purchase with a third party for the sale of the Property at the price of $4.2 million. She received an initial deposit of $100,000 from the purchaser. She also notified Wendy by WeChat of what she had done.
(33) On 15 December 2015, in the evening, the Defendant together with Lam Yat Hung and Lee Bik Ling went to the Property with a document and a cheque for the sum of $300,000 and requested the Deceased to sign the document and accept the cheque. The effect of the document was that the Deceased would first move out of the Property by 20 January 2016. He would later be given by the Defendant a further sum of $1.9 million by way of gift. If he did not sign the document, he would not get the $300,000. The Defendant also said that if the Deceased continued to make her angry, she would not sell the Property. Under those circumstances, the Deceased agreed to and did sign the document. Wendy was present on that occasion and also signed the document. That document has been produced in evidence.
(34) Two days later, the Defendant reneged and decided to cancel the sale. She had to return the initial deposit as well as pay $100,000 to the purchaser as compensation.
(35) On about 31 December 2015, the Deceased went to SHC & Co with a view to obtaining a copy of the document which he was supposed to have signed at SHC & Co in July 2010. He was given copies of 3 documents instead. He thought that his signature on those 3 documents had been forged. He remembered that he had signed only one document in English. He reported the matter to the police on 7 January 2016. As stated above, I shall deal with such documents below. It is not clear from the evidence whether the said 3 documents were originals or copies.
II. Lai Wai Fung
24.He was the first witness for the Plaintiff. He confirmed the truth of the evidence stated in his witness statement. He carried out decoration work in the Guest House and had a good relationship with the Deceased and Madam Chan and kept up communication with them.
25.He said that sometime in about 2012, during a casual conversation with Madam Chan, she told him that the Royal Observatory Property had been sold for $12 million, that $4 million had been given to each of Tse Kai Kwong and the Defendant and that the remaining $4 million was handed over to the Defendant to be held on trust for the maintenance of herself and the Deceased. The Defendant was to pay for their maintenance every month.
26.No question was asked of him by counsel for the defence in cross-examination.
III. Chow Mui Mo Ching (Wendy)
27.The evidence of Wendy can be summarized as follows : -
(1) She and her husband, Chow Yat Kwan, have emigrated to the United States.
(2) On 21 October 2015, the Executrix telephoned her and informed her that the Deceased hoped that she and her husband could return to Hong Kong. When she asked for the reason, the Executrix told her that the Deceased had transferred the Property to the Defendant to be held on trust for him and that, when he asked for the return of the same to him, the Defendant refused to do so.
(3) Soon after that, the Defendant telephoned her and said that the Deceased did ask her to return the Property to him. She further said that she would wait for her and her husband to return to Hong Kong before “交翻晒的嘢比佢”. The Defendant also suggested that they could communicate by WeChat in future.
(4) On 21 October 2015, she received the following message from the Defendant :
“你好，我是林太（亞明）我媽媽的喪事於11月6日辦妥。你們有空回來探望曹公公嗎?我要把現在公公住的房子轉回他的名字。你們可以回來見證嗎?祝山。安好!”
(5) Sometime in November 2015, she received another phone call from the Defendant. The Defendant said that if she were just to return the Property to the Deceased, he would not be able to mortgage or sell it. Hence, she would suggest that the Property be sold and then all the proceeds of sale could be given back to him for his maintenance.
(6) On about 3 December 2015, the Defendant rang her and said that the Deceased would need to pay her $2 million from the proceeds of sale.
(7) She also confirms the truth of the evidence of the Deceased as set out in paragraph 23 (33) and (34) above.
IV. Cheung Chui Wan (the Executrix)
28.The gist of the evidence of the Executrix can be summarized as follows : -
(1) She is a professional photographer. She is also a great lover of cats and dogs and has kept many such pets. Hence, she has acquired the nickname of “貓姐”.
(2) She first moved to a unit on the 6th Floor of Honour House in 1998. In 2001, she moved to her present address at Flat 5 on 16th Floor, just 2 doors away from the Property. Later, in September 2009, she bought the same flat for $2.15 million.
(3) She is the honorary secretary of the Incorporated Owners of Honour House and had been acquainted with the Deceased and Madam Chan for many years.
(4) After the death of Madam Chan in October 2015, the Deceased sought her assistance in contacting his son and daughter-in-law and asking them to come back to help him to claim back the Property from the Defendant whom the Executrix did not know at that time.
(5) The Deceased told her that because his health was deteriorating, he transferred the Property to the Defendant to hold on trust until his sons returned to Hong Kong at which time the Property should be transferred to them.
(6) She then telephoned Wendy in the United States and told her what the Deceased had told herself.
(7) She also asked a friend to help her make a search about the Property on the Land Registry record and got to know that on 20 July 2009 the Deceased had assigned to the Property to the Defendant for a consideration of $600,000.
(8) After she had informed the Deceased of what she had learnt from the land search, the Deceased became very agitated. He said that the Property should have been simply transferred and not sold to the Defendant. Moreover, he had not received any purchase money.
(9) She then telephoned Wendy again to let her know what had happened.
(10) Subsequently, Wendy telephoned and informed her about the communications between herself and the Defendant.
(11) One day, the Defendant telephoned her of her own initiative. The Defendant said that she was willing to return the Property to the Deceased but that that should take place in front of the son and daughter-in-law of the Deceased. Hence, the Defendant asked her when Wendy would return to Hong Kong. She said she did not know.
(12) She confirms the truth of the evidence of the Deceased as set out in paragraph 23 (29) above.
(13) She confirms the truth of her evidence which is set out in paragraphs 24 – 29 of her witness statement as follows : -
“24. 在該2015年12月4日會面中，被告人曾作出以下的承認:-
(1) 被告人應承在曹公兒子及兒媳回港後，會轉回金勳大廈物 業給曹公。當我說 : -
“呀Wendy同我講，佢就話，[被告人]初時同佢傾話 無問題嘅。如果佢地翻嚟，就交翻晒的嘢比佢…”
被告人承認並說 : -
“係呀，係呀＂
(2) 被告人最初的想法，是將金勳大廈物業交回給曹公。她說她最初的想法是 : -
“我係最初原本係比番層樓佢，我要佢層樓嚟做乜嘢唧”。
(3) 當曹公說他沒有收過港幣$60元萬時，被告人承認她並沒有付給曹公港幣$60萬元。曹公問被告人 : -
“妳幾時俾過 $60萬我先?”
被告人承認並說 : -
“我冇比過你”。
但被告人卻指稱華姐有付給曹公港幣$60萬元。
(4) 被告人承認金勳大廈物業在2009年6月的市價遠遠高於港幣$60萬元。她說 : -
“果陣時層樓大約$120萬左右，我就當你$180萬。”
我隨即說我在金勳大廈的物業也是09年買的，買價為港幣$215萬元。
(5) 當曹公最初要求 被告人將金勳大廈物業轉回給他的時候，被告人曾提出將華姐從金勳大廈物業帶走。被告人說 : -
“你如果要攞番層樓，得，我即時帶呀媽走…”
(6) 被告人和華姐的關係起初不好。她說 : -
“本來我同我媽媽已經決裂 啦。”
(7) 曹公說 : “我對你老母幾十年都咁好，佢而家死咗，你地就 咁對我＂。被告人聽後沒有表示異議。
被告人以上的承認及說話，有錄音為證。
25. 但是，在該會面中，被告人與她的弟婦李碧玲(謝啟光太太)要求曹公需從賣樓所得中須付給她港幣$200萬元，理由是被告人在2010後曾經付給曹公和華姐每月港幣$15,000元的生活費。被告人並指稱曹公跟印傭把華姐氣死。被告人指責曹公說 : -
“佢最後就糟質我呀媽 … 我覺得 [你] 同工人夾埋呢激死我呀媽架。”
曹公當時對被告人說她沒有理由要曹公付她港幣$200萬元。曹公再說 : -
“$200萬元已經攞咗我一「橛」，我仲點生活呢… 呢D係我棺材本 … 你做好心D啦。”
但是，曹公最後答允被告人的要求。翌日，我代曹公致電被告人，告知她曹公答允她的要求。
26. 大約在2015年12月5日，被告人簽了一份臨時買賣合約，同意以港幣$420萬元賣出金勳大廈物業，並從地產經紀處收取港幣$10萬元訂金 。
27. 曹公的大兒子曹文遠及兩位媳婦(包括Wendy)約在2015年12月11日回港。他們在香港逗留了兩星期，約在2015年12月24日離開香港。
28. 大約在2015年12月15日，被告人帶同一張港幣$30萬元的支票要求曹公收下，並要求曹公必須先遷出該物業，之後才再將餘下的金錢交給曹公。在這情形下，曹公收下上述港幣30萬元的支票。我當時不在現場，但我知道當時Wendy在場。
29. 據我所知，兩日後，被告人反悔，並到地產公司取消該物業的買賣。＂
(I have checked the quotations by the Executrix set out in paragraph 24 of her witness statement against the agreed transcript. They accord with each other. I shall refer to some of the other parts of the agreed transcripts below.)
(14) She subsequently helped the Deceased to arrange for the obtaining of the 3 documents from SHC & Co.
(15) In the course of her cross-examination by Mr Chen, counsel for the defence, she said that the Deceased had given her an explanation as to why he wanted to transfer the Property to the Defendant to hold until his sons returned to Hong Kong. He once had a flat mate by the name of “Chung Cheung”. That person died without leaving any relative and his entire estate went to the government on bona vacantia. He was worried that the same thing would happen to him. He discussed with Madam Chan and she suggested that he should transfer the Property to the Defendant first.
V. The Documentary Evidence
29.At this juncture, it would be convenient for me to refer to the following documentary evidence : -
(i) The documents copies of which were obtained by the Deceased from SHC & Co;
(ii) other parts of the agreed transcripts.
(i) The documents copies of which were obtained by the Deceased from SHC & Co
30.On about 31 December 2015 when the Deceased went with one of his neighbours to SHC & Co, he was given the documents referred to below. As mentioned above, it is not clear from the evidence whether they were originals or copies : -
(a) A document in English entitled “MEMORANDUM OF SALE AND PURCHASE” dated 13 July 2009 (“the S P Memorandum”) whereby the Deceased agreed to sell and the Defendant agreed to purchase the Property for the consideration of $600,000. The completion date was stated to be 22 July 2009. Clause 2 thereof reads as follows : -
“(2) Vacant possession of the Property shall be delivered to the Purchaser on completion.”
It appears to bear the signature of the Deceased as Vendor and that of the Defendant as Purchaser. Although the document looks in every way to have been drafted by a lawyer, it does not bear any reference to any lawyer or law firm nor was it witnessed by any lawyer. It was registered in the Land Registry against the Property. There is an endorsement on the backsheet showing it to be a true and complete copy certified by a solicitor of SHC & Co on 31 December 2015. There is also a Stamp Certificate attached thereto showing that stamp duty in the sum of $100 had been paid. Since the consideration was under $2 million, no ad valorem stamp duty was payable on the transaction.
(b) An Assignment dated 22 July 2009 (“the Assignment”) whereby the Deceased assigned the Property to the Defendant. The opening words of Clause 1 which is the assignment clause read as follows :-
“1. In consideration of HONG KONG DOLLARS SIX HUNDRED THOUSAND (HK$600,000.00) paid by the Purchaser to the Vendor (receipt whereof is acknowledged), the Vendor as Beneficial Owner ASSIGNS to the Purchaser …… .”
On the signature page, the signatures of both the Vendor and the Purchaser were supposed to have been witnessed by someone by the name of Ng Kwok Ching, a clerk in SHC & Co. There is also an interpretation clause signed by Ng Kwok Ching whose signature was verified by a solicitor of SHC & Co.
(c) A one-page document in Chinese dated 22 July 2009 and addressed to SHC & Co (“the Instruction”) which appears to be an instruction to SHC & Co to the effect that, inter alia, the purchase money for the Property had been settled between the Vendor and the Purchaser themselves and that the solicitors’ firm would not need to be concerned with it. It also appears to bear the signatures of the Deceased as Vendor and the Defendant as Purchaser. On the copy of this document produced in court, there also appears the additional words “並不是本人簽明” above another signature which appears to be that of the Deceased. These must have been written in by the Deceased subsequently.
31.My understanding of the case of the Deceased is that he only went to SHC & Co once in July 2009, that he signed only one document in English, probably the Assignment (despite the fact that he thought that even the signature on the Assignment was not his), and that the signatures appearing on the S P Memorandum and the Instruction were not his.
32.Unfortunately, no one from SHC & Co made any witness statement or came to court to give evidence. I was informed by the defence side that the firm was asked to give evidence in the case but they refused. Neither the Defendant nor the Plaintiff’s side saw fit to issue a subpoena ad testificandum obliging someone in the firm with the relevant knowledge about this case to come to court to give evidence. I will have to decide the case in such rather unsatisfactory state of the evidence.
33.At this juncture, I should also mention that there has been produced in evidence by the defence a copy of the Will of Madam Chan also dated 22 July 2009 in English and obviously prepared by a lawyer. It was witnessed by a solicitor, Chan Ching, and a clerk, Choi Kwok Leung, both of SHC & Co.
34.I believe that the point being made by the defence based on the Will of Madam Chan is that the Deceased must be aware that Madam Chan was making her will and that he should have realized that he could have also made a will giving the Property to his sons instead of having to transfer the Property to the Defendant to be held on trust until the sons returned to Hong Kong.
(ii) The Agreed Transcripts
35.Regarding the recording made on the occasion when the Defendant, Lee Bik Ling, Wendy and the Deceased went to have tea sometime in November 2015, the following parts of the agreed transcript are relevant : -
(1) “被告人: 我係，將個筆錢分4年或者5年比你，你地接唔接受先?接受，我就揾人，揾律師，唔接受，我就，我唔會一炮過比，比百幾萬佢架，我甚至乎，你地，我，可以話，亦都信唔過，響我個心中啊，我實際上係保障佢嘅唧，不過佢肯唔肯呢?我我我分幾期，我總言之喇，拿，總言之，每期嗰個錢，我係應該到嘞，咁我就寄比你，由你黎再寄比佢，或者你地番黎比佢，但係現在呢，佢要搬走，我就可以比多20萬佢，去搬屋，我已經係做到咁樣架嘞，我我我唔可以再咩架嘞，我都要比我個女鬧我架嘞，我又比我細佬鬧我嘞，真係架，拿，我係應承左係咁，你你你你去研究下，仲有我今次蝕左嗰20萬呢，律師費呢，公公一定要出，我要扣硬，就係咁啊。佢肯，我ok。”
(2) “被告人: 可唔可以應承我係，我係我每年每一個月，每年每一個月一次過…
曹梅慕貞:幾多年啊
被告人: 欸，如何係淨番150萬，咁我每年比50萬囉；如果淨番160萬，咁我話每年比4廿萬，分4年囉咁樣囉，咁樣好無?
曹梅慕貞:或者兩、三年內比
被告人: 兩、三年內比係我係比你啊
曹梅慕貞: 姐係…
被告人: 下?如何你你要我一炮過比囇你你都得，等我賣咗層樓囉，我我都會夠錢買，不過我唔肯比阿貓姐係咁咁樣格硬屈我咋嘛。我係會賣架層樓，我愛嗰層樓無用格，我而家住緊千幾呎嘅樓，我愛嗰層樓做咩?我覺得好價就賣，唔好價咪唔賣囉。”
36.Regarding the agreed transcript of the occasion on 4 December 2015, in addition to those parts set out in paragraph 28 (13) above, the following parts are also relevant : -
(1) “林太 : 你係唔係一定要賣呢層樓?
(被告人)
曹公 : 唔係我邊有錢唧
(原告人)
林太 : 你愛錢嚟做乜喞?我而家每個月都錢俾你
(被告人) 喎
曹公 : 我想有一筆錢……攞…攞…攞返吖嘛
(原告人)
林太 : 嗱…我同你講，呢個樓呢就一定唔止$420萬
(被告人)
……………………………………………………………………
林太 : 我都唔係話鑑平鑑賤賣層樓
(被告人)
張女士 : NO
林太 : 我無所謂，$520萬又好，$420萬又好，$320萬都好，但係我一定要收返我需要嘅錢。咁如果你話$420萬呢，但係唔會有好多錢咋
張女士 : er….就算照計返，基本上呢，咁耐呢，真係連$450萬都做唔到，因為兩個…兩個做開，er即係嗰嗰
林太 : 我唔係話，如果佢係要賣嘅話…
(被告人)
玲 : 我諗你搞錯，我姑奶嘅意思呢就呢棟樓係乜嘢價錢都無所謂，但問題係我姑奶要攞返應份要攞嘅錢。咁如果佢賣得低嘅，咁我姑奶攞返自己應該要攞嗰份錢呢，就變咗佢就唔會有好多錢剩＂
(2) “曹公 : 唧…即係而家搞成點喞?
(原告人)
林太 : 我，總言之我話俾你聽，你唔駛諗可以你賣咗
(被告人) 之後可以攞筆錢，唉，我都費事同你講＂
(3) “林太 : 唔係，唔關
(被告人)
張女士 : 因為阿Wendy同我講呢
林太 : 唔關阿Mira事
(被告人)
張女士 : er，佢就話，er阿林太呢，即係初時同佢傾話，
(06:27) 無問題嘅如果佢哋返嚟就交返哂啲嘢俾佢
林太 : 係呀
(被告人)
張女士 : 咁突然佢，你琴日又同佢講話要多$200萬
林太 : 我唔係話要多$200萬，我都係成日講，佢返嚟
(被告人) 賣咗幾多錢，我會俾佢，但我會除咗佢，佢無聽清，聽明白喞，我話我、一定要收返，我、我媽所出嘅錢。因為佢令我太傷心啦＂
(4) “張女士 : 佢自己係諗住賣，我琴日問佢，因為我話阿林太同阿Wendy講話想要返$200萬，佢話咁多，咁我話因為你自己同阿林太講話俾返啲，你自己嗰日同阿林太講話，層樓收到錢俾返阿林太，啲錢係林太嘛
曹公 : 咁而家即係話林太好，收到錢就當俾佢飲茶囉，
(原告人) 應該嘛，即係佢以前對我咁好囉，我賣咗層樓咪當多謝你囉
林太 : 啱啱啱啱
(被告人)
張女士 : 係，阿林太話係原意係，個意思係攞返$200萬
曹公 : $200萬有乜理由你要$200萬
(原告人)
林太 : 我點解唔得唧
(被告人)
曹公 : 吓?嗰陣時寫紙俾你，我而家最多俾返$100萬
(原告人) 你啦，哎呀
張女士 : 唔好勞氣，唔好勞氣
林太 : 係吖，唔好勞氣
(被告人)
曹公 : 咩$200萬你已經攞咗我一蹶，你話仲點能生活
(原告人) 呢，呀……
張女士 : 唔好勞氣，你唔好勞氣，得得得得
曹公 : 嗰啲係我棺材本，真係最多俾$100萬你，阿玲
(原告人) 呀你做好心啦＂
(5) “張女士 : 不如咁啦，阿林太，$100萬你接唔接受?
林太 : 唔接受，你如果再激得我嬲呢，我就，我同你講，
(被告人) 你激得我嬲呢，我就
張女士 : 唔好勞氣，唔好勞氣
林太 : 我連埋租約出去，我賣$300萬，我就愛$300萬
(被告人)
張女士 : 唔好勞氣
林太 : 我真係吖，我理得佢死
(被告人)
張女士 : 唔好勞氣，真係唔好勞氣，我嚟唔係要令你勞
氣嘅
林太 : 我唔係吖，我真係好勞氣呀
(被告人)
曹公 : 唔好咁勞氣啦
(原告人)
玲 : 點都好啦，我諗而家咁嘅情況就，真係傾唔埋，因為基本上喺我地嘅立場呢，我地屋企人商量過啦，$200萬呢我地一定要返$200萬啦，但係$200萬對上呢，叠樓賣咗幾多錢呢我地唔干涉，基本上$200萬，因為呢
曹公 : 唔好講呢啲嘢啦
(原告人)
玲 : 我地俾佢每個月，我姑奶俾佢嘅錢呢其實已經係over咗$100萬啦，咁跟住額外仲有其它嘅嘢我地都已經條數我地唔計
林太 : 我唔同佢計啦已經，我地地條數已經唔計啦
(被告人)
張女士 : 因為我聽阿公公講呢
曹公 : 唉，唔怪得啦
(原告人)
張女士 : 阿華姐買尖沙咀層樓俾嘅錢呢，係好似你地講咁
林太 : 係呀，尖沙咀係佢無佢份嘛
(被告人)
張女士 : 唔係，我唔係話要返，因為我好似記得阿林太你講，阿華姐自己一份，你地兩兄妹一人一份，咁嗰啲就阿華姐自己養老嘅
林太 : 係呀，咪就係俾佢養老囉，所以而家每個月咪俾
(被告人) 錢佢囉
張女士 : 咁其實如果再係層樓度再攞返嘅嗰啲錢
林太 : 佢要攞返層樓吖嘛
(被告人)
張女士 : er但係其實
林太 : 我咪ok囉
(被告人)
張女士 : 其實阿林太
林太 : 嗱，老實講嗰層樓我唔，我已經，根本就唔係佢
(被告人) 啦
玲 : 因為基本上呢，依家大家呢，就講得難聽啲就公說公有理，婆說婆有理
(6) “林太 : 我唔知呀，呢啲係我同阿媽，阿媽同佢嘅關係，
(被告人) 我唔識，我點知
曹公 : 我簽俾你之嘛
(原告人)
林太 : 我都唔明點解佢要寫層樓俾我個名，我唔想要＂
(被告人)
VI. The Defendant
37.The evidence of the Defendant can be summarized as follows : -
(1) She was aged about 76 years at the time of giving evidence. She had a stroke at the end of 2019.
(2) She had all along been the most trusted relative of her mother, Madam Chan. Her mother used to discuss with her about the mother’s financial affairs and would sometimes ask for her assistance in dealing with her assets.
(3) She admitted that her mother and the Deceased did live together at the Property, but it started probably after they had started operating the Guest House.
(4) After Madam Chan had died in 2015, she still kept a good relationship with the Deceased and together with Lee Bik Ling visited him quite often.
(5) Her mother did tell her that the Deceased had won a lottery, although she had no idea about the amount of the winning or when it happened. In the witness box, she said that the Deceased did say that he had won $270,000 in a lottery.
(6) Her mother also told her that the Deceased did give her $30,000 to purchase the Man Yuen Property as his gift to her. Later her mother gifted that property to Lee Bik Ling.
(7) She said that the Deceased had the habit of gambling. According to her mother, the Deceased had not much savings. Even if he had won the lottery, his money was used up by lending to friends, remitting to the Mainland and gambling.
(8) The Deceased only helped out Madam Chan in operating the Guest House; he was not a partner of the business. After his retirement, he was being looked after by Madam Chan.
(9) The Knutsford Terrace Property was purchased by Madam Chan for $140,000 in January 1974. It was occupied by Tse Kwok Leung and Tse Kai Kwong. It was transferred to Tse Kai Kwong in 2016.
(10) In 1981, Madam Chan purchased the Observatory Road Property for $650,000. According to her understanding, Madam Chan used the income from the Guest House to purchase that property. Later, Madam Chan let out that property to a lady who changed the name of the Guest House. Madam Chan derived a stable income from that property.
(11) In about July 2009, Madam Chan made a will to arrange for the distribution of her assets. Madam Chan also told her that since the Deceased wished to have more cash to spend, he was willing to sell the Property to Madam Chan for $600,000. Madam Chan also said that she would have the Property assigned to her. Madam Chan further said that the Deceased would like to live in the Property until he died and she agreed.
(12) In addition, Madam Chan said that because the Deceased was a gambler, she was afraid that he would mortgage the Property to obtain cash to spend and cause her to lose her place of residence. Hence, she decided to purchase the Property from the Deceased for $600,000.
(13) Regarding the assignment of the Property to her, on 13 and 22 July 2009, Madam Chan, the Deceased and herself went to SHC & Co. She witnessed the Deceased signing the SP Memorandum. Before he signed that, a staff member of SHC & Co explained clearly to the three of them the nature and contents of the SP Memorandum.
(It is to be noted that the Defendant has not said who had prepared the SP Memorandum or why no reference to the name of SHC & Co or any of its solicitors or staff members appears in the SP Memorandum despite the fact that it is in English and had been explained (interpreted) to the 3 of them at the office of that firm.)
(14) (At this juncture, I should also note that there has been produced in court a copy receipt by SHC & Co which acknowledges receipt from the Deceased the Mortgage Memorial, Further Charge Memorial and Reassignment Memorial relating to the Property on “this 10th day of July, 2009”. The Defendant has not explained how and by whom such documents were delivered to SHC & Co on “this 10th day of July, 2009” and not on 13 or 22 July 2009. She has certainly not alleged that the Deceased delivered those documents to SHC & Co on 10 July 2009.)
(15) The Defendant continued and said that, on 22 July 2009, Madam Chan, the Deceased and herself went to SHC & Co to sign the Instruction as well as the Assignment. She said that she personally witnessed the Deceased signing those two documents and that the signing of those two documents was witnessed by a solicitor and a staff member of SH Chan & Co.
(Again, it is to be noted that the Defendant has not given any explanation as to why, although the Assignment bears the signature of a solicitor of SHC & Co as witness and that of a clerk of SHC & Co as interpreter, the Instruction does not bear any signature of anyone from SHC & Co as a witness. Nor has she explained who had drafted and prepared the Instruction for the Deceased and herself to sign.)
(16) She said that the health of the Deceased was good between 2010 and 2015 and that there was no need for him to transfer the Property to her pending the return of his sons. Furthermore, he could have done it by way of a deed of trust.
(17) She admitted that she did not pay the Deceased the sum of $600,000 but believed that her mother had done so. In the witness box, however, she said that she did not know whether her mother had paid $600,000 to the Deceased.
(I should note that from the bank statements or passbooks both of the Deceased and of Madam Chan relating to their known bank accounts, some of them produced in court at a very late stage of the trial, no trace can be seen of any payment out of the sum of $600,000 or any approximate sum by Madam Chan or any receipt of the sum of $600,000 or any approximate sum by the Deceased during the relevant period.)
(18) Regarding the proceeds of $12 million from the sale of the Observatory Road Property, Madam Chan did divide it into 3 shares of $4 million each, one for Defendant, one for Tse Kai Kwong and one for Madam Chan herself. The Defendant did put the $4 million for Madam Chan in a separate account with the Hang Seng Bank.
(19) Between October 2010 and December 2015, every month she gave money to the Deceased and Madam Chan to spend. In addition, she gave money to them for their maintenance and also the sum of $4,000 for employing an Indonesian domestic helper. She had been keeping an account of the money she gave to the Deceased since 2009.
(20) After the death of Madam Chan, the relationship between her and the Deceased deteriorated, probably over the domestic helper. The Deceased kept on asking her for money to spend and for her to transfer the Property to him or sell the same in order to get money for him to spend.
(21) She did communicate with Wendy on WeChat. She did say that she would re-transfer the Property back to the Deceased :「我要把現在公公的房子轉回他的名字」. She thought that that was the only way to attract the sons of the Deceased to come back to Hong Kong. That was her true intention at that time.
(22) She did in fact think of selling the Property and apportion part of the proceeds to the Deceased by way of a gratuitous payment.
(23) Although she had signed an agreement for sale and purchase of the Property, she changed her mind because she thought that the sale seemed to have been all pre-arranged by the Executrix and she did not like it.
VII. Lee Bik Ling
38.The evidence of Lee Bik Ling is not very substantial. She said that she had been looking after Madam Chan and the Deceased since 2005, such as by accompanying them on their visits to the hospitals or the doctors.
39.She said that after the death of Madam Chan, the Deceased suddenly asked her to request the Defendant to give him money or to assign the Property to him. He even said that if she managed to succeed in persuading the Defendant, he would reward her by paying her $200,000.
40.The rest of her evidence relates to what happened at the Property on the occasion at the end of November 2015 when the police was summoned. That incident really has no significant bearing on the issues in the case. I do not propose to spend any time by dealing with the allegations relating thereto.
DISCUSSION
41.One of the points taken by the Deceased was that he did not really understand the effect of the one document in English signed by him at SHC & Co in July 2009, probably it was the Assignment. His understanding of the effect of the document signed by him was that it was an assignment of the Property to the Defendant free of any consideration and to be held by her pending the return of his sons to Hong Kong. He further stated in his witness statements in effect that the signatures on the SP Memorandum and the Instruction were not his although on their face the signatures were purportedly his. They also resemble his signature in the Assignment.
42.In the above circumstances, in the absence of expert evidence on handwriting and on the balance the probabilities, I do not find that the signatures apparently of the Deceased on the SP Memorandum and the Instruction have been forged. They are his signatures. That, however, is not the end of the matter.
43.I have considerable doubt as to whether the Deceased did actually attend the office of SHC & Co on both 13 and 22 July 2009 as alleged by the defence. My doubt has arisen from the following facts : -
(i) No one from SHC & Co has been asked or subpoenaed to come to court to give evidence. Although both the Plaintiffs’ side and the Defendant’s side have tried to put the blame on each other for not calling any witness from SHC & Co, in all the circumstances, I think it is more incumbent on the part of the Defendant to call SHC & Co to give evidence.
(ii) It is rather strange that the SP Memorandum should not be witnessed by anyone in SHC & Co or bear any reference to that firm when it appears obviously to have been drafted by a legally trained person and was allegedly signed at the office of SHC & Co after it had been explained by someone from that firm to the Deceased, Madam Chan and the Defendant. Again, a witness from SHC & Co would have helped to provide more information about the matter.
(iii) Exactly the same considerations apply to the Instruction.
(iv) Then there is the receipt issued by SHC & Co acknowledging that they had received from the Deceased the mortgage documents “on this the 10th day of July, 2009”. Even the Defendant has not alleged that the Deceased did go to SHC & Co on 10 July 2009 to deliver to them the mortgage documents. Again, unfortunately, no one from SHC & Co has come to court to give evidence either from recollection or from information gathered from the firm’s file as to what really happened.
44.In light of the above and the unsatisfactory state of the evidence, on the balance of probabilities, I tend to believe the evidence of the Deceased that he did go to the office of SHC & Co only once, probably on 22 July 2009. I also find that it would not be surprising that in fact all the documents, namely, the SP Memorandum, the Instruction and the Assignment had been prepared for the Deceased to sign at the office of SHC & Co all at one go on 22 July 2009. I find that, when the Deceased said that he had only signed one document in English at the office of SHC & Co, in view of his age and health condition, he might have forgotten that he had signed all the three documents. Even if I am wrong about this, it does not detract from my finding on the point of resulting trust below.
45.Regarding the understanding of the Deceased that the assignment of the Property to the Defendant was for her to hold it until his sons’ return to Hong Kong, I accept his evidence based on the following factors : -
(i) The innumerable admissions made by the Defendant as set out in her own evidence and in the agreed transcripts referred to above to the effect that she had intended to re-transfer the Property to the Deceased, initially without consideration and, subsequently, in return for $2 million to be kept by her in the event of the Property being sold.
(ii) The fact that the Deceased was allowed to reside in the Property rent free until his death.
(iii) The fact that on the available evidence, the consideration of $600,000 was never paid to or received by the Deceased.
(iv) The admission made by the Defendant in her cautioned statement to the police after the Deceased had made a complaint to the police :
“究竟事後我媽媽有無俾到60萬港元佢我就唔知，總之我就無”.
46.Furthermore, on the basis that the assignment of the Property was made to the Defendant voluntarily and without consideration and in the absence of any presumption of advancement, the prescription of resulting trust would arise to the effect that the Defendant would be holding the Property on a resulting trust for the donor, the Deceased. The law is trite. See, eg Lau Ting Tai v Chung Chun Kwong [2010] 3 HKC 352 @§24 per Reyes J :
“24. Here one has conveyances of land made for no consideration. That gives rise to a presumption of resulting trust by operation of equitable principle.”
and
Yu Shiu Ngam v Zen She Lin [1999] 1 HKC 823 @827G per Beeson J :
“D1 did not pay any consideration for the property and there was therefore a presumption of a resulting trust in favour of P.”
See also Snell’s Equity (34th ed) page 751 para 25-015.
47.The next issue that has been raised is the effect of the acknowledgment of receipt by the Deceased by the receipt clause in the Assignment (“the Receipt Clause”). It has arisen in the following way.
48.No issue of estoppel was raised by the Defendant in the Defence which was filed as early as in December 2017, nor has any issue of estoppel been included in the Agreed List of Issues dated 24 May 2021 put before the court.
49.After the hearing of the evidence had been completed on 3 June 2021, the case was adjourned to 22 June 2021 for oral closing submissions to be made.
50.After the Executrix had filed and served her written Closing Submissions on 17 June 2021, the Defendant suddenly issued a Summons returnable on 22 June 2021 applying for leave to file her proposed Amended Defence adding a new paragraph 28 aa which reads as follows : -
“aa. Further or alternatively, the Plaintiff is contractually estopped from contending that he did not receive the said HK$600,000 because of the receipt clause under the Assignment dated 22 July 2009 which reads as follows:- “In consideration of HONG KONG DOLLAR SIX HUNDRED THOUSAND (HK$600,000) paid by the Purchaser to the Vendor (receipt of whereof is acknowledged)…”: ”
51.The Summons is vigorously opposed by the Executrix on the grounds that it is too late and that the proposed amendment is of no assistance to the defence.
52.It is trite that a defence based on estoppel must be pleaded.
See the cases of : -
Li Kwai Fong Ah Pat v Bachy Soletanche Group (CACV 30/1989 unreported 22/2/1990 at page 3 per Penlington JA)
Joytex Development Ltd v Super Homes Ltd [2018] HKCFI 2286 (HCA 18/2012 unreported 10/10/2018 at paras 133 – 134)
53.There has been no explanation by the Defendant as to why the point was not pleaded in the first place and not included in the Agreed List of Issues. Furthermore, there has been no explanation as to why the application to amend the Defence was made so late, even beyond the eleventh hour. Such conduct is totally against the regime and spirit of the Civil Justice Reform. For such reason alone, I will exercise my discretion and dismiss the Summons.
See Li Xiao Yun v China Gas Holdings Ltd (CACV 28/2013 unreported 11/3/2013) per Lam JA (as he then was) at para 18
Waddington Ltd v Chan Chun Ho Thomas (HCA 3291/2003 unreported 7/5/2013) at para 53
Crane World Asia Pte Ltd v Hontrade Engineering Ltd (HCA 109/2014 unreported 14/6/2016) at para 8(9)
In case I am wrong, I shall deal with the arguments of the parties regarding the merits of the plea of estoppel.
54.Counsel for the Executrix, Mr Lawrence Ng, has cited the following cases in support of the proposition that a receipt clause is not conclusive and that it is open to his client to show that the purchase price had in fact not been paid for the assignment of the Property to the Defendant : -
Greer v Kettle [1938] AC 156
Pai Chin Ming v Luo Xiao (HCA 2693/2006 unreported 25/9/2007 at paras 38 - 39)
Tang Teng Hong Tso v Cheung Tin Wah [2014] 2 HKLRD 1032 at paras 34 and 39
Asgain Co Ltd v Cheng Ka Yan (No. 2) [2018] 2 HKLRD 641 at 36-37
See also one of the cases cited in some of the abovementioned authorities :
Close Asset Finance Ltd v Taylor [2006] EWCA Civ 788
55.Counsel for the Defendant, Mr Vincent Chen, has argued that the Asgain case (supra) in fact does not assist the Executrix. Mr Chen puts his argument thus in his Supplemental Closing Submissions for the Defendant : -
“2. In §55.4 of P’s Closing Submissions, the Court of Appeal’s decision in Asgain Co Ltd v Cheng Ka Yan (No. 2) [2018] 2 HKLRD 641 [P#38] has been referred to. However, the most important dicta of the Court of Appeal have been omitted by P, as follows:-
“11. In the context of estoppel based on a receipt clause, the Privy Council held in Prime Sight Ltd v Lavarello [2014] AC 436 that such a clause could operate as an estoppel even though both parties knew that the statement was not true. At [41], Lord Toulson said:
…if as a matter of construction the recital amounts to a mutual agreement to treat it as true, and if there are no vitiating factors such as illegality or misrepresentation, the fact that the parties have willingly so bound themselves is itself sufficient reason for the contract to be enforced.”
12. Hence, the fact that the parties knew that payment had not been made was not sufficient to defeat the effect of the Receipt Clauses.
13. We are therefore unable to support the first basis relied on by the judge to reject the contractual estoppel defence.
…
16. Applying these propositions to the facts of the present appeal, the estoppel arising from the Receipt Clauses is the assumption that the payment obligations under the Memorandum of Agreement on the part of the defendant had been discharged even though payment had not been made. Hence, Ming executed the Assignment on behalf of the plaintiff without obtaining any payment from the defendant.”
(emphasis added)
(3) The Court of Appeal in the end held that there was no estoppel in that particular appeal only because of a specific finding of facts that the said estoppel was extinguished by a counter-estoppel arising from a part payment of the defendant.
“17. However, as found by the Judge (and there is no appeal against the finding), the defendant started to make part payments starting from 1 February 20121. Those payments were accepted by the plaintiff as part payments of the purchase price payable by the defendant.
18. The necessary inference from such conduct of the parties in the making and accepting of part payments is that the assumption of discharge of the payment obligation as set out in the Receipt Clauses was abrogated by them. If the Receipt Clauses gave rise to an estoppel, the effect of such estoppel was subsequently extinguished by a counter-estoppel arising from the part payments by the defendant. We cannot see any basis for making such part payments other than an acceptance by the defendant that her payment obligation under the Memorandum of Agreement had not been discharged by the Receipt Clauses. Notwithstanding time being given to Mr Ho to take instructions after such analysis was put to counsel, he could not advance any other suggestion.” (emphasis added)”
56.In the Prime Sight case which was referred to in the Judgment of the Court of Appeal in the Asgain case, what happened was that a husband assigned a lease to a company belonging to his wife for a stated consideration. Both the husband and the company knew that the consideration was actually not paid despite the receipt clause by which the husband acknowledged that he had received the consideration. Subsequently, the husband was adjudged bankrupt. The trustee in bankruptcy then issued a statutory demand on the company to pay the consideration money. The company disputed the debt by relying on the receipt clause. On the petition of the trustee in bankruptcy, the court of first instance in Gibraltar found that the debt had been proved and made an order for the winding up of the company. The company’s appeal to the Court of Appeal of Gibraltar was dismissed. It further appealed to the Privy Council. The Privy Council allowed the appeal on the basis that there was a disputed debt by reason of the receipt clause. After having examined all the relevant authorities, Lord Toulson said in the judgment as follows : -
“45. The law is correctly analysed by Spencer Bower, Estoppel by Representation, 4th ed, p 197:
“an estoppel by convention need not involve any misleading of a representee by a representor, nor is it essential that the representee shall be shown to have believed in the assumed state of facts or law. The full facts may be known to both parties; but if, even knowing those facts to the full, they are shown to have assumed a different state of facts or law as between themselves for the purposes of a particular transaction, then a convention will be established. The claim of the party raising the estoppel is, not that he believed the assumed version of facts or law was true, but that he believed (and agreed) that it should be treated as true.”
46. This passage refers to estoppel by convention and not expressly to estoppel by deed. However, there is no logical reason to treat declaratory statements in a deed which are intended to be contractually binding as less effective than any other express or implied contractual convention. The law as stated by Spencer Bower not only carries the considerable authority of Dixon J, who was a master of the common law, and is supported by earlier authorities to which reference has been made, but more fundamentally it accords with the principle of party autonomy which underlies the common law of contract.”
57.It is to be noted that the Prime Sight case, being a decision of the Privy Council after 30 June 1997, is not binding on this court but is only a persuasive authority.
58.In reply to Mr Chen, Mr Ng has made, inter alia, the points described below.
59.First, Mr Ng relies on the part of the Judgment by Kwan JA in the case of Yang Dandan v Hong Kong Resort Co Ltd (CACV 247/2015 unreported 9/8/2016) where Her Ladyship said at paragraph 81 as follows : -
“Contractual estoppel
81. I do not propose to deal with the arguments addressed to us on contractual estoppel as this is not necessary to the disposal of the appeal. I note in the recent decision of the Court of Appeal in DBS Bank (Hong Kong) Ltd v Sit Pan Jit, CACV 91/2015, 10 June 2016, the court left open the question whether the English cases on contractual estoppel should be followed (at §§130 to 132). It would be more appropriate to consider the availability of this defence and its juridical basis on another occasion. I express no view on contractual estoppel, and on the judge’s holding that clause 16 is not to be construed as a provision limiting or excluding liability for misrepresentation.”
60.Secondly, Mr Ng refers to the Asgain case and makes certain points. Before I deal with his points, I shall refer to the Asgain case first.
61.In that case, P, the vendor of a property sued D, the purchaser, for the unpaid purchase price for D’s interest in the property. The receipt clauses in the Memorandum of Agreement and the Assignment recited that the full purchase price had been paid and received by P. The Deputy Judge below rejected D’s primary case that she had paid the full purchase price and found that she had only paid a lesser sum. The Deputy Judge rejected her argument that the receipt clauses gave rise to a contractual estoppel in her favour on the grounds that : (a) P was not aware of the receipt clauses and thus the parties had not agreed their effect and (b) there was no reliance on the receipt clauses since D had made part payments after execution of the Assignment. The Deputy judge further ruled that D could not rely on section 18(1) of the Conveyancing and Property Ordinance Cap 219. D appealed and her appeal was dismissed by the Court of Appeal. The Court of Appeal held, inter alia, that : -
(i) The first reason was not supportable. A receipt clause could operate as an estoppel even though both parties knew that the statement was not true, unless there were vitiating factors such as illegality or misrepresentation.
(ii) Since P accepted the part payments from D as payment towards the purchase price, the necessary inference from their conduct was that the assumption of discharge of the payment obligation in the receipt clauses was abrogated by them. If the receipt clauses gave rise to an estoppel, it was subsequently extinguished by a counter-estoppel or waiver arising from the first part payment by D, unequivocally acknowledging that she continued to have an obligation to pay notwithstanding the receipt clauses.
62.Mr Ng relies on the postscript contained in the last part of the Judgment of the court which reads as follows : -
“Postscript
46. In the appeal, we do not receive any submissions on the correctness of Prime Sight Ltd v Lavarello in the application of the concept of estoppel to a receipt clause. We can see that there is a tension between Prime Sight Ltd v Lavarello and the inconclusive nature of a receipt clause as discussed in the cases we cited in the discussion on s.18(1).
47. Prime Sight Ltd v Lavarello has been subject to some criticisms: see Handley, Reinventing Estoppel in the Privy Council (2014) 130 LQR 370; Handley, Estoppel by Conduct and Representation (2nd ed.), para.5-021; Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (5th ed.) para.17-015. It was recently considered by the Privy Council in an appeal from the British Virgin Islands in Chen v Ng [2017] UKPC 27 where further academic commentaries on Prime Sight were cited by Lord Neuberger.
48. As we have not heard any submissions in this regard, we would only confine ourselves to pointing out that as far as Hong Kong law is concerned, Prime Sight may still be subject to further debate in our courts notwithstanding our judgment in this appeal.”
Mr Ng submits that in light of the uncertainty regarding the correctness of the decision in the Prime Sight case, this court should not make any ruling against the Executrix on the basis that that decision is definitively correct in all the circumstances in the present case.
63.Mr Ng next refers to another Privy Council decision in the case of Chen v Ng [2017] UKPC 27 in which Lord Neuberger and Lord Mance said at paragraph 29 as follows : -
“29. “Prime Sight has been criticized extra-judicially for ignoring an old rule that recitals as to payment in a deed were not binding in equity: Handley, Reinventing Estoppel in the Privy Council (2014) 130 LQR 370, 371 and Handley, Estoppel by Conduct and Representation (2nd ed) (2016), para 5-021, pointing out that the Board only cited Lord Maugham’s statement in [1938] AC 156 that a recital as to payment in a deed gave rise to an estoppel at law, but omitted his further statement (p 171) that:
‘The position in equity is and was always different … The well-known rule of the Chancery Courts in regard to a receipt clause in a deed not effecting an estoppel if the money has not in fact been paid is a good illustration of the equity view.”
Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (5th ed) (2015) also submit, at para 17-015, that Prime Sight was wrong on this score, and the Board in Prime Sight was not referred to the quite recent English Court of Appeal decision in Close Asset Finance Ltd v Taylor [2006] EWCA Civ 788.”
In relation to this case, Mr Ng makes the same point as set out at the end of paragraph 62 above.
64.In the Chen v Ng case, so far as relevant to the case before me, the issue arose out of a receipt clause relating to a sum of US$40,000 acknowledged by Mr Ng to have been paid to him by Madam Chen with whom he was living together as the consideration for the transfer to her of 40,000 shares in a BVI company. After having discussed various aspects in the decision of the Prime Sight case and having referred to various comments critising that decision, the Judicial Board went on to say : -
“33. While the Board did not hear full argument in this area, it readily accepts that there can be cases where an estoppel enlarges the effect of an agreement, by binding parties to an interpretation which would not otherwise be correct ….. ”
“35. The Board also adds that Australian case law may have developed differently from English law in this area ….. ”
“36. In the present case, the agreed statement that consideration had been paid was clearly gratuitous, and for the benefit of one side only. Both parties knew that it had not been paid, and neither can have relied on the statement that it had been paid. Their intention to be bound, or any reliance they placed on their agreement to be bound, without consideration cannot suffice; otherwise gratuitous promises could readily be made binding. In these circumstances, two alternative analyses exist of the apparent agreement recorded in the documents mentioned in para 3 above:
(A) The parties’ recital in the Transfer that consideration had been paid was simply inaccurate and the consideration of US$40,000 recorded in the Note was and, presumably, remains payable, or
(B) The parties’ real agreement, when executing the Note and the Transfer with its recital that the stated consideration of US$40,000 had been paid, was that no such consideration should ever be paid.
In case (B), the Board considers that no contract for sale of the Shares can have come into existence. This lays the ground for Mr Ng’s case, on which he succeeded in the Court of Appeal, that
(Bi) the Transfer gives rise to a resulting trust (at least as a matter of presumption, which the Court of Appeal concluded that Madam Chen had not rebutted).
But the Board considers that an alternative, in the light of all the circumstances, including the later documents mentioned in para 4 above and the rejection of Mr Ng’s evidence (if the judge’s rather than the Court of Appeal’s assessment of it were to stand) is that
(Bii) there was a gift of the Shares to Madam Chen.
37. The difficulty which this case presents is that none of these possibilities was fully explored in the evidence at trial. ….. ”
65.In the uncertain state of the authorities regarding the effect of a receipt clause as briefly described above, involving complicated jurisprudential analysis under the laws applicable in Hong Kong, England and, possibly, Australia also, I do not think that it would be appropriate for me to make any definitive decision on the point which arose at the last minute during the closing submissions of counsel which lasted only a morning in court. The arguments addressed to me on the point were only slightly more than brief.
66.For this reason and for the reason also that the point had not been canvassed in evidence, I should not exercise my discretion in allowing the application to amend the Defence.
67.Furthermore, the point can be disposed of on another ground. In view of the numerous admissions made by the Defendant, especially those discerned from the agreed transcripts, which I have found, the Executrix would have been able to plead a counter-estoppel, as in the Asgain case, by relying on such admissions as well as the fact that the Deceased was allowed to reside in the Property rent-free until his death.
68.Hence, the proposed amendment to the Defence and the reliance on the Receipt Clause would not assist the Defendant. In such circumstances, it would be futile for me to allow the application on the Summons. I will therefore dismiss it with costs.
69.I therefore find that the Property has been held by the Defendant on a bare trust or a resulting trust for the Deceased.
70.In view of my specific finding above, I do not think that I need to nor is it appropriate for me to deal with the points of sale at an undervalue, unconscionable bargain or shamtransaction raised by the Plaintiff. Once I have found that there is a bare trust or a resulting trust, such points are no longer relevant.
71.Finally, I deal with the Alleged Trust Money. On the evidence, in particular, the admissions made by the Defendant as referred to above, the fact that after she had received the sum of $4 million she kept it in a separate bank account and continued to pay out maintenance for the Deceased and Madam Chan at the rate of $15,000 per month until after the death of Madam Chan, I find that it has been proved that the Alleged Trust Money was given to her to be held on trust for the maintenance of the Deceased and Madam Chan and, after the death of Madam Chan, for the maintenance of the Deceased alone. I have also not forgotten about the evidence of Lai Wai Fung about what Madam Chan had told him about the Alleged Trust Money; he was not cross-examined by the defence.
72.Since the Defendant had ceased to pay for the maintenance of the Deceased from December 2015 until the death of the Deceased, she should account and pay to the estate of the Deceased the arrears of maintenance at the rate of $15,000 per month from December 2015 until the date of death of the Deceased in December 2019. According to my reckoning, the period is 48 months and the total sum works out to be $720,000.
73.Regarding what is left of the Alleged Trust Money (if any) since it had originated from Madam Chan, the same should be held on a resulting trust for Madam Chan’s estate.
CONCLUSION
74.In summary, I make the following findings : -
(i) I accept the Plaintiff’s contention that the Property was assigned to the Defendant by the Assignment to be held on trust for him.
(ii) I find that the stated consideration of $600,000 was never paid by Madam Chan or the Defendant and was never received by the Deceased. The consideration of $600,000 stated in the Assignment was probably for the purpose of making the transaction look like a sale at a consideration which would not attract ad valorem stamp duty. In such circumstances, there would be a resulting trust of the Property in favour of the Deceased.
(iii) I do not accept the allegation by the Defendant that in 2009 she was told by Madam Chan that the Deceased wanted to have money to spend and therefore was asking to sell the Property to the Defendant for $600,000. The evidence shows that the Property would be worth something like $2 million in the latter part of 2009. If the Deceased really wanted to sell the Property in order to get money, there was no reason why he would not sell it in the open market at a much higher price.
(iv) I dismiss the Summons for amendment of the Defence issued by the Defendant just before the hearing of the closing submissions on 22 June 2021 on the grounds that it was issued too late and that it was a futile application.
(v) In any event, I find that no estoppel would have arisen from the Receipt Clause in favour of the Defendant.
(vi) I find that the Alleged Trust Money was given by Madam Chan to the Defendant to be held on trust for the maintenance of herself and the Deceased.
(vii) I find that the Defendant had been in arrears of maintenance owed to the Deceased in the sum of $720,000.
75.I therefore make the following declaration and orders : -
(i) A declaration that the Property is held by the Defendant on a bare trust or on a resulting trust for the estate of the Deceased;
(ii) An order that the Defendant do assign the Property to the estate of the Deceased;
(iii) An order that the Defendant do pay the sum of $720,000 to the estate of the Deceased;
(iv) An order that the costs of the Plaintiff be taxed according to the Legal Aid Regulations;
(v) An order nisi that the costs of the action be paid by the Defendant to the Plaintiff.
(vi) Liberty to the parties to apply on the working out of paragraph (ii) of this order, if necessary.
76.Finally, it remains for me to thank counsel on both sides for their assistance to the court.
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(Patrick Fung SC) |
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Deputy High Court Judge |
Mr Lawrence K F Ng, instructed by Kwok, Ng & Chan, assigned by Director of Legal Aid, for the Plaintiff
Mr Vincent Chen, instructed by Yip, Tse & Tang, for the Defendant
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